Management models that emphasize efficiency and cost savings can “put pressure on local expertise,” says Steven Shultz, director of global compliance and reporting at E&Y. “As you go through the whole cycle of reporting and taxation and audits, you need to have those key relationships with the regulators themselves.” This can be important, for example, in Asian countries like China, Malaysia or Indonesia, where personal relationships play crucial roles, Shultz says.

The study found a surprising lack of supervision and control over local GCR functions among the companies surveyed. More than 40% of respondents cite a lack of global governance over statutory financial filings, while 60% report a lack of global governance over direct and indirect tax filings by their local units. Yet as the report's authors note, “Strong corporate governance reduces the likelihood of unplanned audits and is a prerequisite for simplification, standardization, automation and centralization of key processes.”

The study concludes that global compliance and reporting is at a “tipping point,” and that most large global companies now realize they must transform GCR not only to achieve greater efficiencies, but to mitigate risk in an “increasingly hostile tax and regulatory environment.” At the same time, the study argues that the benefits—cost savings, avoidance of tax assessments and penalties, and improved accountability and control—are significant.